North East property deals top £154m in first three months of 2015

The most significant deal was the purchase of a Morrisons supermarket in Darlington for £45m

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The Hilton Newcastle Gateshead hotel

Uncertainty about the outcome of next week’s General Election has failed to dampen investment in the North East during the first quarter of 2015, according to a new report.

The latest edition of Lambert Smith Hampton’s (LSH) UK Investment Transactions report reveals that across the North East total investment reached £154m in the opening three months of 2015, an increase of 3% on the first quarter of 2014.

A surge of investment in the retail and leisure sector was a key driver of activity in the region, accounting for 76% of the total value transacted.

The most significant deal was Aberdeen Asset Management’s purchase of a WM Morrisons supermarket at Morton Park in Darlington for £45m, followed closely by USS’s purchase of the 254-bed Hilton Hotel in Gateshead for £36m.

Other deals included WM Morrison’s sale of Killingworth Centre to Development Securities for £19.2m and Kuwait-based Dimah Capital’s purchase of Cobalt 22, where Utilitywise are now based, for £15.95m.

Bill Lynn, director of agency and investment at Lambert Smith Hampton’s Newcastle office, said: “Investment in the North East commercial property market continues to pick up pace despite possible concerns over the outcome of the General Election.

“The region has proved a consistent and vibrant market for investors across the traditional asset classes over the last year, and the last quarter was no different.”

Across the UK, total investment as a whole climbed to £19.1bn in Q1 2015, 59% higher than the same time last year and a new record for a first quarter.

The major driver of this strong performance was overseas investment, with inflows from international investors increasing by 57% year-on-year to reach £9.6bn – half of the quarter’s total volume.

While all of the main traditional asset classes – industrial, offices and retail – saw double digit increases in investment compared to the same period last year, demand for the so-called alternative sectors was especially buoyant.

Investment into hotels was particularly notable, rising by 121% year-on-year, albeit from a relatively low base.

Ezra Nahome, chief executive officer of Lambert Smith Hampton, said: “The outcome of General Election may be the most uncertain in a generation, but the case for investment in UK commercial property remains robust.

“As a rule, investors don’t like uncertainty. However, factors such as the ongoing low interest rate environment, the welcome return of rental growth across the length and breadth of the UK, and the country’s reputation as an economic safe haven are having a positive influence in the market.

“A speedy resolution to any collation negotiations will be important if the strong start to the year is to be maintained.”